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The Role of Health Care in a Democratic Capitalist Society

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The Role of Health Care in a Democratic Capitalist Society Pepperdine Policy Review Volume 6 Pepperdine Policy Review Article 12 5-27-2013 The Role of Health Care in a Democratic Capitalist Society Barbi Appelquist Pepperdine University, School of Public Policy, [email protected] Follow this and additional works at: https://digitalcommons.pepperdine.edu/ppr Part of the Health Policy Commons, Other Public Affairs, Public Policy and Public Administration Commons, Policy Design, Analysis, and Evaluation Commons, Public Administration Commons, Public Affairs Commons, Public Policy Commons, Social Policy Commons, and the Social Welfare Commons Recommended Citation Appelquist, Barbi (2013) "The Role of Health Care in a Democratic Capitalist Society," Pepperdine Policy Review: Vol. 6 , Article 12. Available at: https://digitalcommons.pepperdine.edu/ppr/vol6/iss1/12 This Article is brought to you for free and open access by the School of Public Policy at Pepperdine Digital Commons. It has been accepted for inclusion in Pepperdine Policy Review by an authorized editor of Pepperdine Digital Commons. For more information, please contact [email protected], [email protected], [email protected]. Pepperdine Public Policy Review 2013 The Role of Health Care in a Democratic Capitalist Society Barbi S. Appelquist, Esq. On March 23, 2010, President Barack Obama signed into law The Patient Protection and Affordable Care Act, commonly known as “Obamacare”. The Patient Protection and Affordable Care Act (“Affordable Care Act”) was enacted by a consensus reached by the members of each of the House of Representatives and the Senate as required by Article III of the Constitution. Did the government’s hand reach too far into the health care economy of our nation? Should the government limit its involvement to the regulation of health care professionals? Is health care a good that is best allocated in a free market with liberal traditions? Or, as required by the Affordable Care Act, should health care insurance be mandated to provide for equal access to health care? To answer these questions, this paper will focus on the Affordable Care Act’s general application to the capitalist tradition as framed by Adam Smith and Milton Friedman, with a limited analysis of the federal mandate to purchase individual health insurance. This paper is limited in its scope to provide an analysis of the law using the classical framework of Adam Smith and Milton Friedman. I. Overview of Health Care System and the Patient Protection and Affordable Care Act On June 28, 2012, the Supreme Court delivered its opinion on the constitutionality of the Patient Protection and Affordable Care Act in Department of Health and Human Services v. Florida . The main question the Supreme Court answered was whether Congress had sufficient authority under Article I of the Constitution to mandate minimum coverage (Department of Health and Human Services v. Florida, 2012). The Constitution, on a strict textual basis alone, Pepperdine Public Policy Review 2013 provides neither the right to health care nor the right to health insurance. With respect to the individual mandate, the majority of the Supreme Court justices did not follow Justice Antonin Scalia’s interpretive approach to strictly interpret the language of the Constitution and the language of the Affordable Care Act (Department of Health and Human Services v. Florida, 2012). Justice Scalia, in his dissent, stated that health care is not expressly incorporated into the federal government’s area of legislation (Department of Health and Human Services v. Florida 2012, pp. Post 1-65). Instead, the majority followed Justice Stephen Breyer’s interpretative approach and considered other factors, including, among other things the constitutional text, history, tradition, precedent, purpose, consequences, and legislative intent, to find that health care and, specifically, the mandate, is constitutional with the limiting interpretation that the mandate acts as a tax (Department of Health and Human Services v. Florida, 2012). Did the government’s hand reach too far into the health care economy of our nation? Should the government limit its involvement to the regulation of health care professionals? Is health care a good that is best allocated in a free market with liberal traditions? Or, as required by the Affordable Care Act, should health care insurance be mandated to provide for equal access to health care? To answer these questions, this paper will focus on the Affordable Care Act’s general application to the capitalist tradition as framed by Adam Smith and Milton Friedman, with a limited analysis of the federal mandate to purchase individual health insurance. The analysis provided in this paper will provide support for this more interpretative approach to constitutional analysis with a focus on the economic theory and rationale of exceptions to a strict free market economic system. A. U.S. Health Care System Pepperdine Public Policy Review 2013 The American health care system has transitioned from a free-market, direct payer for services system to a fragmented, multiple payer, multiple provider system. Health care is colloquially defined in a variety of ways and, for the purposes of this essay, the term “health care” includes the following components: (1) providing medical services to treat and/or cure existing disease or illness (e.g., surgery to remove a known tumor, etc.); (2) providing medical services to prevent future disease or illness (e.g., vaccinations, surgery to prevent hereditary cancer, etc.); (3) providing medical services for routine health and wellness needs (e.g., vaccinations, annual exams, etc.); (4) researching, developing, testing, manufacturing, and distributing prescription medicines; and (5) providing insurance to patients via individual plans and employer-sponsored plans. 1 The American Hospital Association and Blue Cross are the forefathers of the American health care system (Bodenheimer & Grumbach, 2012, p. 39). Unlike European health care systems that were designed by governments for patients, the American system was designed by the health care providers for the medical community-at-large and, in this way, has been driven more by capitalist motives of wealth creation than by charitable purposes (Bodenheimer & Grumbach, 2012, p. 39). To understand the American system, one needs to understand what existed when the United States was formed in the mid-1700s. The first medical school in the colonies was opened in 1765 by the University of Pennsylvania and focused on, “promoting a curriculum that emphasized the therapeutic powers of blood- letting and intestinal purging” (Bodenheimer & Grumbach, 2012, p. 74). At this time, other medical groups existed, including midwives and homeopaths. Medical training improved when the Johns Hopkins University School of Medicine opened in 1893 with a high standard of medical education that continues today, including 1 For a general analysis of each of these components, see Bodenheimer, T., & Grumbach, K. (2012). Understanding health policy: A clinical approach (6th ed.). New York: McGraw-Hill Medical. Pepperdine Public Policy Review 2013 a 4-year course of study at the graduate school level, competitive selection of students, emphasis on the scientific paradigms of clinical and laboratory science, close linkage between a medical school and a medical center hospital, and cultivation of academically renowned faculty (Bodenheimer & Grumbach, 2012, p. 74). This basic academic approach to medical services continued until World War II. “Medical science and the provision of medical care were both very different in the United States before World War II then they are now” (Friedman, 2008, p. xi;, Foreward of Gratzer, The Cure ). The discovery of penicillin in 1941 changed the field of medical science; physicians could now cure disease. Doctors delivered medical care directly to a patient in a relatively free market as a direct fee-for-service between the patient, as a consumer, and the medical provider, as the supplier of services (Friedman, 2008, p. xi; Foreward of Gratzer, The Cure ). “The essence of the process was the consensual relationship between the patient and the physician” (Friedman, 2008, xi; Foreward of Gratzer, The Cure ). Health insurance companies did not exist and “[m]edical insurance covered catastrophic events, not everyday care” (Friedman, 2008, p. xi; Foreward of Gratzer, The Cure ). What changed in the market? World War II resulted in price and wage controls that led to increased competition for skilled labor. To compete for skilled labor, employers could now include tax-exempt medical care in their compensation packages (Bodenheimer & Grumbach, 2012, p. 8-9; Friedman 2008 xi, Foreward of Gratzer, The Cure ). By 2010, the health care system was broken; supply and demand were not meeting at the right price. The inclusion of health care insurance was not universal and costs were shared by employers, employees, and physicians. As Parija Kavilanz’s CNNMoney story highlights, the cost of physicians increased and compensation for given services decreased, and as a result [d]octors, especially those operating private practices, said their financial hardship is increasing, making it ‘harder for them to earn a decent living,’ according to a new survey of 673 physicians across 29 specialties by MDLinx, a medical reference website for physicians. (Kavilanz, 2008). Pepperdine Public Policy Review 2013 Unfortunately, “[w]hile the rest of the economy has moved forward, American health care is stuck
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